The Initial Rate on an ARM Will Typically Be

question 71

Multiple Choice

The initial rate on an ARM will typically be

• A) relatively low, which benefits the homeowner.
• B) relatively high to allow the bank to recoup costs.
• C) about the same as a fixed-rate loan of the same maturity.
• D) set by state law.

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Definitions:

Available-for-Sale Investments

Securities that are not classified as held-to-maturity or trading securities and can be sold in the short-term or kept for long-term holdings, with unrealized gains or losses reported in other comprehensive income.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting its liabilities, representing ownership interest in the company.

Brokerage Fee

A brokerage fee is a charge that a broker charges for the facilitation of transactions or services such as buying or selling stocks, real estate deals, or other financial services.

Dividend Per Share

The amount of dividend that a company pays out to each shareholder per share.